Gold Rebounds On Stalled Dollar

Gold Rebounds On Stalled Dollar

Gold rebounds on stalled dollar, this morning’s rise almost erasing the week’s losses, as the dollar halted an eight-day rally, boosting the precious metal’s appeal as an alternate investment.

April gold futures slid 2.5% in the first four days of the week as traders sold the metal to generate cash to pay off margin calls in other markets, but was little changed Thursday at $1,479.30 an ounce on Comex. The yellow metal started last week by climbing above the $1,700-an-ounce threshold for the first time in more than seven years. Then it was hit by the liquidity crunch as equities tumbled into a bear market and economic activity around the world has ground to a halt because of the coronavirus. The April contract is currently at $1,499.50

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.16% Thursday to 922.23 metric tons, according to Reuters.

Investors continue to be spooked by the escalating impact of the novel coronavirus, designated COVID-19, on the global economy. Geopolitical and economic uncertainty typically boosts gold as a hedge against uncertainty.

U.S. initial jobless claims surged to 281,000 last week, the highest number since September 2017, according to Labor Department data released Thursday, and economists at Goldman Sachs Group Inc. have forecast that next week’s figures will be much worse, with as many as 2.25 million Americans filing for their first week of unemployment benefits this week.

Last week’s increase is “clearly attributable to impacts from the COVID-19 virus,” according to the Labor Department’s statement. “A number of states specifically cited COVID-19 related layoffs, while many states reported increased layoffs in service related industries broadly and in the accommodation and food services industries specifically, as well as in the transportation and warehousing industry, whether COVID-19 was identified directly or not.”

The coronavirus has killed more than 9,900 people worldwide and sickened more than 239,000. The first cases were in China, but has spread to the rest of the world. Italy’s death toll topped China’s this week. The virus is a WHO-designated pandemic. California late Thursday became the first U.S. state to order all residents to shelter in place, putting 40 million people on lockdown to avoid contagion.

Goldman Sachs Group Inc. and Morgan Stanley economists have declared that the coronavirus has triggered a global recession, and the only questions remaining are how bad it will be and how long it will last. The U.S. Federal Reserve has reduced interest rates to almost zero with two surprise cuts in as many weeks, joining central banks around the world in attempts to prop up the economy. Meanwhile, Senate Republicans in the U.S. rolled out a $1 trillion stimulus plan.

May silver futures rose 3.1% Thursday to settle at $12.13 an ounce on Comex but fell 16% in the first four days of this week. Spot palladium, which decreased 30% last week, rose 3.3% Thursday to $1,656.14 an ounce. It’s down 8.6% in the first four days of the week. Spot platinum slid 5.6% Thursday to $591.20 an ounce and fell 23% in the first four days of the week.

 

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